OSS - One Stop Systems Inc. (OSS) - Runway Prepped for Exciting Growth Raising Rating and PT
Raising to Outperform; $7.00 PT. Given the sell off in the shares, we believe OSS presents investors with a favorable risk/reward, especially in light of the Company's exciting growth potential, in our view. We are raising our rating to Outperform from Market Perform, and instituting a 12-month price target of $7.00. At our PT OSS shares would trade at 2.0x on a EV/estimated 2021 revenue.1Q21 Results. Revenue of $13.3 million almost equaled the record $13.4 million generated in the first quarter of 2020, a non-COVID impacted quarter. OSS reported breakeven EPS for the quarter, compared to an EPS loss of $0.07 last year. Adjusted EPS was $0.03 in 1Q21 versus a loss of $0.04 in 1Q20. We had projected revenue of $13 million and a net loss of $0.03 per share.AI Transportables. We believe OSS has the opportunity to carve out a leadership position in this fast growing niche. More and more of the massive amounts of data being generated are moving to the edge and a significant portion of them need to be acted on immediately, often in harsh environments. These requirements play to OSS's strengths.Business Pipeline. During the quarter, One Stop Systems won three more $1+ million programs, including two new customers to the Company. The pipeline remains robust with some 24 $1+ million opportunities being worked on. OSS closed two more additional $1+ million deals so far in the second quarter. The Company is well on its way of matching the last two years in which OSS won 16 such awards each year.Updated Projections. We believe the operating environment is continuing to open up and we expect the Company to post sequential improvement throughout the year. For the second quarter, we project revenue of $14.4 million. Gross margin is projected to be consistent with the first quarter. We are projecting net income of $300,000, or $0.02 per share, compared to breakeven last year. For the full year, we are estimating revenues of $60.2 million and net income of $1.6 million, or $0.08 per share, with the EPS increase driven by improved gross margins and operating leverage. Read More >>